Press Releases

 Valeo: first half results - Improvement of margins, solid order intake

PARIS, France, 24 July, 2003 - Valeo’s Board of Directors, which met today, approved the consolidated results for the first half 2003.

Valeo’s sales fell by 6.5% in the first half 2003 as compared with the same period in 2002. Excluding exchange rate variations, sales are stable whilst automobile production volumes fell by 4% in North America and 1% in Europe. The gross fall is due to the appreciation of the euro compared with American and Asian currencies.

The order intake reached 1.3 times sales for the first half as compared with 1.2 times sales for the full year 2002 and 1.0 times sales in 2001. The strength of the order intake reflects the quality and innovativeness of the product offer as well as the competitiveness of the industrial facilities.

In a difficult market environment, the Group benefited from the flexibility of its industrial base and improved its margins. During the six month period, each quarter represented an improvement over the comparable year-earlier quarter.

The increase of the gross margin (17.8% or +0.7 points as compared with the year-earlier period) demonstrates the efficiency of the industrial rationalization measures:

	Valeo continued to reduce its supplier base (from 3,300 at end-June 2002 to 2,700 at end-June 2003), whilst multiplying its partnerships with the best performing suppliers;
	during the first half, Valeo continued its industrial restructuring. At end-June 2003 the Group had 130 sites as compared with 142 a year earlier (and 170 as of March 2001);
	The gross margin increased significantly during the first half: the margin rate grew from 17.5% of sales in the first quarter to 18.1% in the second quarter.

The operating income growth (5% or +0.4 margin points over the year-earlier period) reflects the positive evolution of the gross margin as well as the control over R&D expenses and sales and administrative costs.

The net income increased by 50% to 102 million euros, due to the reduced financial expenses resulting from the lower debt level and a significant tax reimbursement.

The net indebtedness of the Group was reduced by 27% over the first half (414 million euros at end-June 2003 compared with 564 million euros at 31 December 2002) due to:

	The improvement in results;
	A reduction in working capital requirement (1.3% of sales at end-June 2003 as compared with 2.4% at end-December 2002) ;
	The optimization of the industrial base (in particular through the standardization of processes and the reduction in the number of sites). The Group thus reduced its investment levels to 4.4% of sales in the first half as compared with 5.6% in the same period of 2002.

The sound financial situation of the Group gives it the ability to mobilize the necessary resources to accelerate its organic and external growth.

Thierry Morin, Chairman & CEO said: “During the second half, Valeo will continue with the rationalization of its industrial base in order to improve its competitiveness. Valeo’s ability to provide advanced systems that are ever more competitive in terms of price, quality and service is reflected in the accelerated order intake which is a sign of increased growth from the second half of 2004.”

Valeo is an independent industrial Group fully focused on the design, production and sale of components, integrated systems and modules for cars and trucks. Valeo ranks among the world's top automotive suppliers. The Group has 130 plants, 54 R&D centers, 9 distribution centers and employs 69,000 people in 25 countries worldwide (end June 2003).

For further information please contact:
Kate Philipps
Group Communications Director
Tel.: (+33) 1.40.55.20.65

Bruno-Roland Bernard
Investor Relations Director
Tel.: (+33) 1.40.55.37.86

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